Have you stopped buying Tax Lien Certificates at auction after 2023? If so, why?

[Abdenour Achab]

I believe many people in this forum have never bought a tax lien certificate at an auction. If you are one those, the MAIN question in the present thread is not for you.

I believe many people in this forum have stopped buying tax lien certificates at auction before 2023. If you are one of those, the MAIN question in the present thread is not for you.

The MAIN question in the present thread is specifically for people who:

1) Bought at least one tax lien certificate at an auction in 2023.

AND

2) Have since decided to no longer buy tax lien certificates at an auction.

If you meet the above two conditions, please state the main three reasons you have decided to no longer buy tax lien certificates at an auction.

The reason I am asking is this. I have just found out a couple of hours ago about https://www.azleg.gov/ars/42/18204.htm. The TLDR version of that web page and other related web pages is that, in Arizona, if you start a foreclosure action against a homeowner who has equity of more than $2,500 in his house using a tax lien certificate, the "defendant" can ask for excess proceeds during the foreclosure action. If he does, and the court finds that such request is reasonable, a "qualified entity" (such as a bank) will conduct an auction, and the owner of the tax lien certificate will only recoup his costs and interest.

From what I read in the present forum, the above problem is now present, or in the process of being made law, in other states as well.

Now the MAIN question

If you have stopped investing in tax lien certificates after 2023, was the above one of the main three reasons?

The other questions below are for everybody.

I have assumed for several years that, if I hold a tax lien certificate on a house with equity, and the owner can easily be located, as soon as my lawyer starts a foreclosure action, if the owner didn't have the means to redeem the certificate, shrew investors would contact that homeowner, offer him some cash for his equity, then, once such an investor acquires the property, he will redeem my tax lien certificate, and all I will only get back is some of my costs plus interest.

I haven't had the time to digest the implications of https://www.azleg.gov/ars/42/18204.htm yet. But, at second brush, it seems to me like the only properties for which an owner would ask for excess proceeds were the properties I was going to lose to shrew investors anyway. So, the new laws about excess proceeds won't affect me. It seems to me like, both before 2023, the only worthwhile properties I might acquire by foreclosing on a tax lien certificate are the ones where the owners of record are dead or hard to find, and underwater properties.

How about now? Do you know who the "defendant" is in Arizona Revised Statutes 42-18204? Is it just the homeowner? Or is it any defendant named in the lawsuit, including judgment holders?

If it's just the homeowner, it seems to me like, against before having the time to fully digest it, this doesn't change anything. I will still only have a shot at underwater properties and properties for which the owner of record is dead or hard to find.

But, in a tax lien foreclosure action, all existing lien holders, including judgment holders, are also defendants. Can they ask for excess proceeds, resulting in an auction in which I would only recoup my costs plus approximately 0% in interest? If so, it seems like they would restrict the pool of gems to only free and clear (other than for the tax lien) properties for which the owner is dead or is hard to find.

Are there any interest rate bid down states that don't have in their laws provisions similar to https://www.azleg.gov/ars/42/18204.htm as they relate to excess proceeds stuff?